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Goodbye FHA Secure

As 2008 passes into memory FHA lenders will be saying goodbye to the FHA Secure program. In accordance with HUD Mortgagee Letter 2008-13, the FHA Secure program will expire on December 31, 2008. This program had offered expanded guidelines for borrowers currently delinquent on their mortgages due to ARM Rate Resets, as well as Rate/Term Refinance transactions from non-FHA mortgages to FHA Fixed Rate Mortgages. These provisions were only temporary.

As of December 31, 2008 HUD will no longer issue Case Numbers under the FHA Secure program. HUD is in the process of working on expanded guidelines to accommodate those borrowers who may be delinquent on their current mortgage and do not qualify under standard HUD guidelines. Personally, I will not be sad to see this program go as neither I nor anyone I know of successfully wrote one of the FHA Secure loans.

Posted by Rich Dansereau on 12/19/2008 09:24 PM

Comments (12)

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Originally posted at: Rich's Blog: Goodbye FHA Secure

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12 Comments on Goodbye FHA Secure

DEC

Hi Rich,

Interesting info. So why wasn't the plan ever (or rarely) used? Too complex, too difficult to qualify, (hence the new one with expanded guidelines), just curious?

Change. Change. Change!

It is really numbing hearing that every week if not day lenders have new rules.

Hang in there and keep educating us.

Rich.... I never wrote either. But I know a guy in AZ that has done like 50 of these. I heard from someone that there were about 400,000 FHA secure loans closed. Besides, the H4H program seems to be much better than the FHAsecure... and did you hear those figures last week, that said that 54% of all mortgages that were modified, still went into foreclosure. It's just bad out there in regards to jobs....

jeff belonger

DEC

Hi rich Good morning. It's a scary world out there for sure. Good luck in 2009.

Lynda - These files almost always had to be manually underwritten as they rarely got automated approval because of the borrower's situation that necessitated the need for it anyway. Kind of a catch 22.

David - Guidelines do seem to be changing a lot but in this case this is an FHA change. In all fairness the expiration was announced in the same letter from FHA as the plan itself.

Jeff - The person you know in Arizona is the only person I have heard of who has written one. HERE is a CNN story about the high rate of default among homeowners who elect for modification. I agree that the Hope for Homeowners does seem more workable. Often the initial programs that come out in any crisis are not very well thought out, like the FHA Secure program.

Gayle - Good morning. It is a troubled time. Hopefully people who are qualified to buy, and want to buy as part of a long term financial plan and/or the pursuit of responsible home ownership will not let the fear and negativity make decisions for them.

Rich,

I am getting schooled this week from mortgage l/o's on the programs available to buyers. It is quite interesting. Question. In your comment to Lynda you said the loans had to be manually underwritten. I koow the norm know is automation, but I have to tell you, 17 years ago when I did work with lenders daily and their buyers to get conditions satisified, I wonder if the process would have been quite as good with automation. It was hard enough to get buyers to understand and get their paperwork together to clear the conditions on their loan approval letters?

Does automation help or heal the process? I'm not engaged in that daily activity anymore and I am curious.

Rich, I don't think I know anyone either. I am amazed at how much publicity HUD gets for these programs and that borrowers are constantly confused because the lenders do not participate. I am glad it is gone as well. Hoepfully something useful will replace it and lenders wil actually get on board as well.

Rich - Not sure that any of the programs that HUD developed will actually work as planned. I have found that Wells Fargo will actually do the H4H but only in house and only for their own customers, that is a big help, isn't it?

Rich, I do not know of anyone either that got a FHA secure through. Usually the "underwriting" tore the file apart and the increased rates, via some lenders, were not always putting people into a better position.

Rebecca - There really is no clear cut yes or no; everything seems to be shades of gray. Automated does set minimum standards and insures that HUMDA rules are not violated (automation does not take into account ethnicity, race, gender, veteran status, etc.). Many lenders allow for manual underwriting when there are compelling issues. The problem is in defining what are compelling factors; they could potentially vary as much as individual underwriters do. I appreciate automated but like to also have the ability to have a file manually underwritten.

Bo - You are right that there is always a lot fanfare that accompanies the announcement of these programs but it takes the analysis that takes months to compile to gage the effectiveness.

Fred - That stinks!

Eric - I am absolutely not a fan of "risk based pricing" on FHA loans. You are right that add-ons can definitely make rates untenable.